Agencies Serving the Poor Face More Problems as Economy Worsens

Newswise — As the nation enters a period of economic uncertainty, many of the 50 million Americans living near or below the poverty line are more vulnerable than at any time in recent years. Yet, the help they need to get a job, locate housing, access health care, or provide for their children is less and less likely to be found in their neighborhoods as agencies serving the poor face potential financial problems of their own, University of Chicago research shows.

Location is important because, contrary to popular impressions, most assistance to low-income families comes in the form of social services, which support work activity and promote greater well-being among the poor, and not cash payments. Today, for every dollar on welfare cash assistance, the U.S. spends about $15 on social service programs delivered typically by nonprofit agencies, but often funded through government, said the study author Scott Allard, Associate Professor in the School of Social Service Administration at the University of Chicago and author of the book, Out of Reach: Place, Poverty, and the New American Welfare State.The findings are based on the Multi-City Survey of Social Service Providers that Allard conducted from June, 2004 to August, 2005. The results are being reported for the first time in his new book.

Allard's work is part of a tradition of scholarship at the University that looks at the ways in which society responds to the needs of the most disadvantaged people. Other work in the School of Social Service Administration has also looked at the mismatch between the needs of the poor to health care and their ability to get those services nearby, for instance. A study by Chapin Hall, a research center at the University, showed that communities in Chicago vary greatly in the services available to poor people.

These programs are quite vulnerable in today's current economic environment, however, as social service programs are often among first places governments look to cut when tax revenues decrease. Private philanthropy dedicated to social services " another critical source of funding " also declines during economic downturns. Ironically, funding to service programs is cut right when the need for help is rising.

Programs also are not well-matched to need, Allard found. His study of social service agencies in Washington, D.C., Chicago, and Los Angeles shows that about 70 percent of the high poverty neighborhoods have low levels of social service provision, meaning that such neighborhoods have no social service agencies or are proximate to only a few extremely overburdened agencies.

"In Chicago, almost 80 percent of the high and extremely high poverty neighborhoods are in areas with low levels of service accessibility," he said. In Los Angeles, 72 percent of extremely high poverty neighborhoods have low levels of service while in Washington, D.C., 63 percent of the neighborhoods have low levels of service.

"That means that in a poor neighborhood there may be five or six people in line for every client slot, while in a better off neighborhood there only may be one or two people per slot," Allard said.

"To a greater extent than most scholars, community leaders, or policy-makers realize, a fair share of the American welfare state has been transformed into a privatized, contracted-out, service oriented means of antipoverty assistance," Allard said.

Total federal expenditures for welfare cash assistance declined by 50 percent from 1997 to 2004 ($9.8 billion to $5 billion, in 2006 dollars). The share of federal welfare spending for non-cash assistance, often services supporting work, went up during that period, increasing from 23 percent in 1997 to 58 percent in 2004 and reaching about $12 billion annually (in 2006 dollars). By comparison, more than $100 billion in public and private money is spent on social services outside the welfare system each year.

The survey showed that nearly 75 percent of non-profits receive some type of government funding, and that half of all nonprofits receiving government grants are dependent on those funds for at least half of their budgets. That dependence makes agencies vulnerable when cuts are made to balance federal, state and local budgets. Today, many states and communities are proposing cuts to government funding for social service programs, which will not only hurt poor populations, but destabilize the nonprofits upon which the safety net depends.

In addition, Allard's research shows that non-profits often do not locate employment, education, mental health, and many other types of services in high poverty areas because affordable office space is hard to find. In neighborhoods that are gentrifying, rents on existing office space often is increased beyond the means of the non-profit organizations.

Those services located in better off neighborhoods are hard for the poor to reach, particularly because many low-income households do not have cars and must depend on public transportation.

The lack of services is particularly problematic for African-American and Hispanic communities. The study found that more than 80 percent of predominately African-American neighborhoods are in areas that have low levels of access to social services, as are two-thirds of predominately Hispanic neighborhoods.

The study also showed that 82 percent of nonprofit service agencies in African-American neighborhoods serve mostly women. "Such findings combined with service accessibility scores provide a striking picture of how disconnected poor black men are from both public and private sources of support in society today," Allard said.

In addition to maintaining public commitments to service programs and developing better systems to connect poor persons to services available in their communities, Allard recommends strengthening efforts to promote private giving to nonprofit service providers and cultivate greater service capacity among existing faith- and community-based nonprofits that are working in the most impoverished neighborhoods.

The Multi-City Survey of Social Service Providers was supported with a grant from the Department of Housing and Urban Development Urban Scholars Grant Program. It included interviews with administrators from nearly 1,500 public and non-profit social service providers.

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